LONDON, Jan 22 (Reuters) - European shares were slightly
lower on Tuesday, weighed down by French telecoms stocks as the
prospect of a price war in the sector loomed.

An unexpectedly strong survey of German sentiment, showing
analyst and investor morale at its highest since May 2010,
helped shares pare early losses by mid-morning trade, partly
reversing a technical selloff that had started on Germany's Dax
index.

Shares in France Telecom, Vivendi and
Bouygues shed between 2.5 percent and 3.7 percent in
brisk volume after the head of Vivendi's SFR mobile operator
said it was slashing prices by as much as 25 percent.

They weighed on the pan-European FTSEurofirst 300
index of top European shares, which was 0.1 percent lower at
1,165.56 points at 1223 GMT. It has slipped from a near two-year
high of 1,170.29 hit on Jan. 10.

Investors were bracing for further losses on national
indexes, data from spreadbetter IG showed.

Around 87 percent of investors on IG's trading platform were
"short", or betting on a fall in the FTSE, which has
outperformed its continental peers so far this year and was
flirting with four-and-a-half years highs.

"People are sticking to their shorts because of how far
we've come," Will Hedden, a sales trader at IG, said.

Shorts accounted for 66 percent and 71 percent of all DAX
and CAC positions on IG's platform, respectively.

Charts also showed the FTSE was "overbought" based on its
14-day relative strength index, a momentum indicator.

Helping curb losses on the FTSE on Tuesday was global brewer
SABMiller. It rose 1 percent after saying its overall
revenues jumped 17 percent in the third quarter compared to last
year, sustained by improving growth in its key Latin American
markets.

ZEW BOOST

European indexes had cut losses in mid-morning trade on the
release of the closely watched German ZEW survey of analyst and
investor sentiment, which rose sharply for a second consecutive
month in January.

That suggested the euro zone crisis is no longer hitting
Europe's largest economy as hard as in late 2012.

"The ZEW was very good and investors are hanging on every
good news," Manoj Ladwa, head of trading at TJ Markets, said.

Investors may have turned overly bearish on the indexes and
could be forced to close their short positions if good earnings
news helps revives a rally in shares, Ladwa said.

With the European earnings season yet to start in earnest,
traders said investors were focusing on results from the United
States, where bellwethers such as Google, IBM
and J&J were due to report.